¡Feliz Cinco de Mayo! Today we travel south of the border for an update on Mexico City’s well-known driving restrictions. What better way to celebrate Cinco de Mayo? Some people prefer margaritas, but here at the Energy Institute we like to turn up the mariachi music and talk about air pollution. ¡Orale!

Also known as “Hoy No Circula” (HNC), Mexico City’s driving restrictions have now been in place for 25 years, and have spurred similar restrictions in Santiago, Sao Paulo, Bogota, Medellin, San Jose, Beijing, Tianjin, and Quito. The format differs across cities, but most of these programs follow Mexico City’s approach and restrict driving based on the last digit of the license plate.

The initial rationale for HNC was local air pollution. Mexico City had some of the highest ozone levels in the world in the late 1980s, and the program was a politically visible way to attempt to address the problem. Unfortunately, there is no evidence that HNC actually improved air quality (Davis, 2008, Gallego, Montero, and Salas, 2013). Drivers did not switch to the subway or bus system. Instead, they used taxis more and bought additional cars so that they could drive every day. Gasoline sales (below) increased steadily throughout the period.

Despite the lack of empirical support, HNC has remained in place. And, in the summer of 2008, the program was expanded to include Saturdays. Again, the primary rationale was air quality (details here), with the Mexico City government attempting to address Saturday air pollution levels that had increased during the 2000s to reach and often exceed typical weekday levels.

The implementation of “Hoy No Circula Sabatino” was much like the original restrictions. Vehicles with a license plate ending in “5” or “6”, for example, cannot drive during the first Saturday each month.

There is more discretionary driving on Saturdays, so one might expect these restrictions to be more effective at getting drivers to substitute to public transportation or to avoid trips altogether. One might also expect Saturday restrictions to engender substitution to Sundays, which would be welfare-improving since traffic and pollution levels tend to be lower.

At the same time, there is a deeper lesson from the initial implementation of the program that should not be forgotten. Drivers everywhere have a revealed preference for fast and convenient transportation and will look for ways to circumvent rationing programs of this form. Whether or not these behavioral changes will be large enough to offset the direct impact of the restrictions is unclear, and will have to wait for careful empirical analysis.

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About Lucas Davis

Lucas Davis is an Associate Professor of Economic Analysis and Policy at the Haas School of Business at the University of California, Berkeley. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.

8 Responses to Driving Restrictions and Air Quality

I don’t suppose anyone has studied the impacts which tolling has on congestion and highway use. If the tolls are high enough, the only vehicles which can afford to drive will be carpoolers and mass transit.

Given the increasing evidence showing how ineffective driving restrictions can be, it is puzzling that authorities in many places, not only Mexico-City, insist in using them as a permanent tool to fight pollution and congestion. The additional evidence shown by Lucas Davis confirms the need to move to tools that have proved to be way more effective such as road pricing.

Thanks JP. It is disappointing because urban air pollution is an enormous problem. The World Bank found that just a 10% decrease in ozone and PM10 in Mexico City would yield benefits of almost $1 billion annually.

Thanks for your great blog post! I agree with both of you that uniform driving restrictions are ineffective. Road pricing should be the first best. While road pricing is politically infeasible, however, recently Germany implemented another interesting policy: “Low Emission Zones”. LEZs restrict vehicles based on PM10 emissions. Every vehicle is categorized into four emission classes and displays a colored windshield sticker (green, yellow, red or black). Cities decide which colored-category to restrict from entering their urban areas. There are over 80 LEZs in Germany and a couple other European countries follow similar programs (Italy, UK, Sweden). As the dirtiest 10% of vehicles are responsible for over 90% of the total emissions, LEZs promise to be much more effective than uniform license plate programs. There, of course, could be other ‘unintended consequences’, such that dirtier vehicles increasingly drive ‘around’ LEZ’s, creating donut-effects. My recent EJ paper suggests that this is not the case, leading overall to reductions of local air pollution between 0%-15% (depending of LEZ size/city). For details see here: http://faculty.washington.edu/hgwolff/LEZ.pdf

Hendrik. Interesting! I look forward to reading your paper. Just a quick question, are these categories based on emissions testing of individual vehicles, or on fleet-wide average characteristics i.e. all <1990 vehicles get a black sticker? My understanding is that there is a great deal of heterogeneity in emissions, even among vehicles of the same make/model/year. -L

good question: the category is based on the precise emission characteristics of the type/model/make/vintage (tested at the manufacturer). You are right, with wear and tear, emissions do increase, but that is not accounted for in the LEZ-regulation. BTW, Germany does not provide the ‘black’ sticker anymore, as this socially stigmatizes drivers. So the dirtiest category simply drives without any sticker. My previous REEP paper should have all those details: http://reep.oxfordjournals.org/content/4/2/293.full.pdf+html?sid=02e8964e-f6cc-4cc1-8415-542e02847223

I am afraid that I don’t get the logic why road pricing is more effective than driving restriction. In the above blog, it says “(With driving restriction,) Drivers did not switch to the subway or bus system. Instead, they used taxis more and bought additional cars so that they could drive every day.” If drivers are willing to pay higher price through taking taxis or buying additional cars in order to drive every day, then they must be willing to pay higher road tolls as well. So why road pricing is effective? What did I miss?

People consume less of something when its price rises. The price of using a road is currently priced at zero. If you raise the price to something above zero you might use it less with your own auto and substitute other types of transport instead. Alternatives include, carpooling, vanpooling, tele-commuting, buses, trains, bicycles and walking.